The biggest health protection gaps in Asia are in China ($805bn) and India ($369bn) due to their large populations and lower level of affordability, according to a study by global reinsurer Swiss Re.
A report issued by the reinsurer, titled, “Asia’s Health Protection Gap: Insights for building greater resilience”, shows that both countries have a high share of out-of-pocket expenses—30% in China and 65% in India—which are much higher than that of mature markets globally at 10-14%. In addition, China and India represent more than 75% of total nontreatment cases in Asia, affecting around 32m households.
The health protection gap in Asia reached $1.8trn in 2017, according to the study which compares the health protection gap across 12 Asian markets, namely China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand, Taiwan and Vietnam. The gap represents 40m households across Asia foregoing medical treatment to avoid financial stress.
The gap is defined as the amount of insurance coverage needed to avoid the financial stress arising from unforeseen direct medical expenses. The gap could be medical expenses not covered by other payers such as insurance, social security or government, forcing people to cut back from other household spending (e.g. school fees, bills) or personal savings to fund such unforeseen expenses. Or it could be non-treatment due to lack of financial resources, potentially exposing the households to greater health risks and worsening health conditions.
Across all of Asia, affordability of treatment is cited as the top challenge, over the emotional burden or time required for treatment. The challenge of affordability will only grow, as medical costs are outpacing inflation in all the markets surveyed.
Millennials are among the most vulnerable
Surprisingly, younger people in emerging markets face a higher amount of financial stress than other age groups, with more than half of the gap (53%) attributable to 18 to 40-year olds. This is likely due to a lower level of understanding of the need for insurance, resulting in lower rates of purchase in this age group. Lower income levels and overconfidence about own health conditions also play a role.
Affluent lifestyles lead to increasing chronic conditions
Households managing chronic conditions are another major driver of the gap, accounting for 46%. This share is the highest in the Philippines (77%), followed by China (55%) and Hong Kong (53%) where lifestyle diseases, particularly diabetes, hypertension, and high cholesterol, have been on the rise. The prevalence of chronic conditions is expected to worsen as urbanisation, ageing and income growth continue.
Overconfidence about health and ability to withstand medical expenses
60% of respondents describe themselves as being healthy, but around one third of them said they did not exercise more than once a month. Meanwhile, 61% of daily smokers consider themselves healthy. Self-reported healthy respondents are more inclined to allow medical insurance products to lapse. This trend is especially prominent in emerging markets with 53% of self-reported healthy respondents having allowed their insurance to lapse in the past, compared to 41% of self-reported unhealthy respondents. One possible explanation is that current medical insurance offerings fail to add value to self-reported healthy customers.
"Although Asia has been growing rapidly and people are becoming richer, access to quality and affordable healthcare continues to be a challenge in our society today. This is unacceptable in this day and age,” said Mr Robert Burr, managing director and head of Life & Health Client Markets Asia, Swiss Re. “This study identifies the various factors driving the health protection gap across Asia. It's time that all the stakeholders—governments, healthcare providers, insurers/reinsurers and non-profit organisations—work together to find solutions.”